RS

FRONT PAGE CONTRIBUTOR

Reflections on the Deficit Deal

I don’t make claims to prescience and have no idea what the final product of the current debt ceiling negotiations will produce. I’m guessing it will not be as good as the boosters claim and not as bad as the partisans on both sides suggest. Make no mistake about it, the debate and deal were of historic import. This is the first time that an increase in the debt ceiling has ever been seriously debated.

It would be a mistake, I think, to be discouraged over this deal or to take uncritically the view of my friend and colleague Francis Cianfrocca that Obama was a big winner. The left doesn’t see it that way. We didn’t win all that we wanted, though I must confess that I’m still more than a little unclear on what was expected to be achieved while operating in the shadow of a bill that had to be passed, but we moved the ball forward and I think we are well positioned for the next round.

Here is my assessment:

We won some tactical victories.
On spending we made some incremental gains. True, the total deficit reduction package doesn’t look like much in light of the long term deficit projections but when looking at those projections we need to keep two things in mind. First and foremost, if the people making the projections really had insights on what the future looked like they wouldn’t be drones working at the Congressional Budget Office. They’d be making serious money. The future is not just like the past only moreso. The same CBO’s ten-year projections in 1995 did not forecast a budget surplus in 1998. To the contrary, they predicted a budget deficit of $357 billion. The second thing to keep in mind is that you eat an elephant one bite at a time. We didn’t get into this mess overnight. We won’t get out of it overnight either.

We won a significant strategic victory.
We won a significant strategic victory in that the terms of the debate have been altered perhaps permanently. The idea that we can no longer spend without consequences has firmly set in the national consciousness. We have the Tea Party backed members of the House and Senate to thank for that. For the first time a Democrat president has acknowledged that entitlement programs will have to be modified. This isn’t to say he’ll go along with what we want but putting those programs up for grabs is a sea change in our national debate. Reform and rationalization of these programs is now, today, a viable goal. That wasn’t the case last year.

What we won matters and what we lost doesn’t.
The “joint commission” is one of the worst ideas to come down the pike in a while. The idea of splitting mandatory cuts 50-50 between defense and discretionary domestic spending is just wrong. This isn’t to say there isn’t wasteful defense spending. There is. But if we’re going to have wasteful government spending I’d prefer that it be focused on killing people and breaking things and not on regulating American business out of existence. It isn’t an unalloyed “Satan sandwich”. Cuts are cuts and I’d much prefer a round of across the board cuts in 2012 — real, honest to gosh cuts — than ephemeral cuts in 2022. Also the baseline for 2012 presumes the expiration of the tax rate reductions enacted under President Bush (President Bush… President Bush… my heavens how good that sounds). If those rates are extended the cuts required of the “joint committee” become larger and the odds of across the board near term cuts go way up. Regardless, this “joint commission” sunsets when a new debt ceiling bill comes up, which, coincidentally will happen shortly after a new Congress is sworn in in 2013. If we win the Congress and/or the Presidency there is no reason to continue this deal. If we lose the House and see another Obama administration, there is no way the Dems will keep this “joint committee.” If we have the status quo we have already won the rhetorical battle. In the meantime we should focus our efforts in getting whatever good we can out of this beast and go for a better deal next time around.

Like so many victories, military or political, this one is not clean cut and overwhelming. I do, however, think that it is a victory and it is a strategically decisive one in the deficit reduction debate.